Pension Agency Ends Public Listing
of Under-Funded Plans
By Frank Swoboda
Washington Post Staff Writer
Thursday, September 4, 1997; Page E01
The Washington Post
The Pension Benefit Guaranty Corp., the federal pension
insurance agency, announced yesterday that it no longer would
publicly list the 50 companies with the largest under-funded
retirement plans.
The agency said the eight-year-old practice was no longer
needed. "With full implementation of the retirement Protection
Act reforms, we now have better enforcement tools in place,"
said PBGC Executive Director David Strauss.
The 1994 pension reform act requires all companies with
under-funded pension plans -- those with less than 90 percent
of the money required to pay off the companies' benefit
promises -- to report the under-funding to workers and retirees
every year.
In past years, the agency would use its annual list as a way to
alert employees of what it considered to be serious
under-funding of their pension plans. At the time, employers
were not required to report the under-funding to their work
forces.
And every year, corporations named on the agency list would
cry foul, claiming that the under-funding had no bearing on the
economic health of the company. Unionized companies, for
example, would always be behind in their funding because they
would make a promise of improved pension benefits at the
start of a contract, but actually would make payments to the
fund over the life of an agreement, assuring a payment lag.
The PBGC ensures what are known as defined benefit plans, in
which an employer promises to pay a certain level of benefits
regardless of cost. The calculation of the future cost is what the
government uses to determine the proper level of funding.
Defined contributions plans such as 401(k) retirement savings
plans, which do not come with such promises, are not insured
by the federal government.
In addition to the new reporting requirements, the 1994 law
stiffens financing requirements for corporations. Strauss said
the combination of the new reporting and funding requirements
negates the need for the public list.
© Copyright 1997 The Washington Post Company
